This feature actually works but you will have to enable a plugin Pagure Tickets from the settings of the project. In fact, the project pagure-importer uses this feature to create new issues on pagure.
I tried this again on my local instance of pagure with plugin enabled and it worked. Here is the screenshot (i edited the title of issue #3 locally): http://img.susepaste.org/60721979

Is there anything else I need to do besides this?

Or maybe there is some other option at the instance level that is disabled for pagure.io? I can't seem to get this working

This should be it. There is one more thing to keep in mind: if you have updated the issues git repo on pagure before the installation of plugin, those changes won't be visible in the UI. This is because, the database is updated with the changes it receives when you push the repo and it happens on the fly. Since, earlier the plugin wasn't installed, any changes to the git repo won't update the database and thus won't appear in the UI. Newer changes after that should be visible though. Sorry, for late response.

This is what I've done

1. made a new repo
2. opened a new issue
3. made a target repo
4. set the "Pagure ticket" flag for the target repo
   
5. $ git clone ssh://git@pagure.io/tickets/REPO-ORIGINAL.git
6. $ git clone ssh://git@pagure.io/tickets/REPO-TARGET.git
7. $ cp REPO-ORIGINAL/* REPO-TARGET/
8. $ cd REPO-TARGET
9. $ git add .
10. $ git commit -a -m "test"
11. $ git push

But I can't see any issue here :(

@vivekanand1101 I've tried this again on a local instance, and it seems to be working fine. I'm not sure why this is not working on pagure.io. This issue can probably be closed I guess...

was there anything in your console when you did your git push? It should give us some ideas of what happened.

Also, there is https://stg.pagure.io if you need some place to test things w/o cluttering pagure.io itself.

Knowing that the original reporter is no longer on pagure.io I'm going to close this ticket.

Feel free to re-open if needed :)